European Union and the 'Third World'

Part 2 - Setting up the Lome Convention
byRon Dorman

During the first five years of operation of the Treaty
of Rome most of the overseas territories of EEC member states had
become independent states for one reason or another and the Yaounde
Conventions created a formal institutional framework for their participation.

Convention

In July 1963 Yaounde, the capital of Cameroun, was
the venue for the first convention between the European Economic Community
(EEC) and the associated states and is known as the First Yaounde
Convention. Eighteen associated African states and Madagascar (AASM)
attended the convention with representatives of the EEC and the agreement
reached ran from 1964 till 1969. This convention was followed by Yaounde
Two which ended in 1975.

The Conventions allowed the Yaounde countries to export
the small amount of industrial goods they manufactured, usually duty
free, into the Community but with much less preference for exports
of agricultural products. To have allowed agricultural products in
on a large scale would have undermined the Common Agricultural Policy
(CAP) of high food prices for the protection of EEC farmers. In return
for this EEC preferential treatment for limited industrial exports
to the Community the AASM countries were required to accept comparable
exports from Community countries.

Investment

Investment from the European Development Fund (EDF)
for financing projects in the associated territories amounted to a
mere total of ECU 3.6bn in the first five years of its existence.
Over the 12 year period of Yaounde I and II Conventions investment
reached ECU 7.4bn. This means prior to Yaounde I, investment in the
18 countries involved averaged ECU 720 million but in succeeding years
was reduced to an average of ECU 620 million!

Exports from AASM countries to the Community during
Yaounde I fluctuated between 35.4% in 1963 and 38.4% in 1968 against
a background of world-wide tariff reductions. By 1973 under Yaounde
II the exports from ASSM countries had dropped back to 33.6% of the
total.

Lome

Although Nigeria, Kenya, Tanzania and Uganda had
negotiated association status by 1969 (the end of Yaounde II) the
likely accession of Britain to the EEC with its numerous Commonwealth
territories, more advanced than French ones, made changes in the agreements
necessary.

The new agreement included Britain's African territories
in preference arrangements but excluded Asian countries India, Pakistan,
Malaysia, Singapore and Hong Kong in the same way as Indonesia was
excluded. This new agreement, Lome I Convention, was signed at Lome,
Togo's capital, in February 1975.

There have been four Lome Conventions and the current
one, Lome IV ends, in 1999. Lome I covered 46 African, Caribbean and
Pacific (ACP) and nine EEC countries but by the time of the Lome IV
Convention, signed in 1990, there were 68 ACP and 12 EEC (now called
EC) countries participating in the agreement.

No free trade

Free trade is not permitted in agricultural products
which compete with CAP although tariffs are smaller than for similar
products from non-ACP countries. However, under Lome I, a system known
as STABEX was introduced which compensates for loss of revenues of
ACP countries' exports to the EU from their major products if greater
than 2% of average earnings over the previous four years. A similar
system was introduced for minerals known as SYSMIN under Lome II.
As prices have generally been rising the systems have not always had
the effect desired by ACP countries and the systems have discouraged
diversification.

Volume of resources from the EDF has steadily risen
in monetary but not real terms under the Lome I,II and III Conventions
whilst the population has risen 40% resulting in an average of less
than 5ECU/head! As EDF funds are made by EU national governments pressure
can brought to bear on the countries receiving aid to ensure the funds
involved are used for contracts with enterprises based in the donor
country.